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Hi Margaret,
This will be one of the biggest societal issues for the Millennials as they grow up in a global workforce. Since the 1960's the workforce dynamics have changed significantly.

Looking at the macro unemployment numbers is misleading as many are under-employed. You won't see macro wages increase until under-employment is reduced.

I believe we are in for a major shift in workforce expectations.

Hi Trevor and thanks for weighing in. Your comments point to the value of this article. They are integrating the various economic, social and political issues involved into a cohesive assessment. They don't forget to count in the numbers of unemployed who have given up, but actually talk about how, when/if they are ready to come back, turn out to be more of the unskilled and therefore underpaid. This pressure wasn't as clear cut in years past.

Looks like the recent warning about this http://www.compensationcafe.com/2015/02/make-me-whole.html was prescient. The imbalanced pattern was clear long ago http://www.compensationcafe.com/2013/04/three-pay-patterns.html and will have profound implications on future workers as summarized here http://www.compensationcafe.com/2014/10/hr-in-2022-1.html.

Remember, you hear it first here at the Compensation Café!

In response to the front-end question of, Why Is This Today's [Employer] Comp Philosophy?

The answer is pretty simple: Because they can.

I think most of this labor shift, post-Great Recession, has been known and lightly acknowledged for maybe 5-6 years now. The phenomenons of globalization, plus technology/automation encroachment has whittled away at the labor supply/demand dynamic in the U.S. during that period of time.

Until that labor oversupply is soaked up, wages and salaries can be expected to remain flat - except in some very limited number of areas, where demand outstrips supply. Regrettably, that's not going to raise all wages and salaries.

Two approaches to Comp Philosophy in single sentences:

1. We pay as little as we can without negatively influencing our success as company

2. We pay as much as we can without negatively influencing our success as a company.

Most would argue that they fall under #2, but in fact most use survey data and "best practices" to ensure #1.

I understand the concept of getting something for as cheap as possible. I also understand that paying a bit more isn't always a bad thing.

What I don't understand is why companies expect a cheap workforce will also be an engaged and happy workforce.

The thing is, Chris, they're thinking that wages may remain flat no matter what's going on with labor supply in the rich-countries.

As Dan's pointing out, most companies use "market practices" as a comfortable euphemism for let's keep the cost of labor as low as possible -- but I think it's often because of no greater insight than that's the way it's being done.

The thing is, as you brought up, the flat salary status quo (sort of like Flat Albert who finds himself everywhere) now makes it easy for no thought to go into budget discussions. (Everybody's blaming it on everyone and everything else.)

But we could influence the discussion to at least examine what's going on and it's fit for our company,if we took a shot at it.

"More of the same" seems to be the constant refrain. Don't disagree with anything said earlier, but note that SSDD appears to be the rule.

Those who pay low don't dramatically increase their competitive pay structures. They simply cite the proper surveys to support their relative maintenance of the status quo. Those who pay high do exactly the same. No one finds any need to alter their total reward strategies or their tactical practices.

A comp pro can always find a survey to support any position. That's what keeps us employed, for those who still have a job. It remains comfortable for those at the top.

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